Demand hopes send cattle futures higher

U.S. live-cattle futures are trading higher Wednesday, supported by hopes that demand for beef could pick up in coming weeks.

April live-cattle futures were up 1.175 cents, or 0.9%, to $1.2655 a pound at the Chicago Mercantile Exchange. Most-active June futures recently advanced 1.125 cents, or 0.9%, to $1.21575 a pound.

Feeder-cattle futures were mixed. The April contract recently fell 0.67 cent, or 0.5%, to $1.363 a pound. Other contracts were mixed.

Cattle futures have been under pressure due to concerns that U.S. retail demand for beef remains sluggish. Typically, the market enjoys a seasonal uptick in prices this time of year as warmer temperatures prompt consumers to fire up their barbecue grills and buy more beef, pork and chicken. Analysts say prolonged cold weather in some regions has delayed the spring grilling season.

"Normally we'd be seeing some strength right now in the cash [cattle] market, and we aren't because demand concerns" have reduced meatpackers' incentive to pay up for cattle supplies, said Scot Miller, head of Scot A. Miller and Associates, a Montana brokerage.

"Part of it you can blame on the weather," said Mr. Miller, who suspects that beef buying could pick up as temperatures rise across the country in coming weeks.

Market participants also are watching for signs that cattle owners are holding back heifers to rebuild thinned herds.

After back-to-back years of severe drought in the central U.S., the wet, cold spring has emboldened some cattle owners to ramp up production in anticipation that feed grains and hay will be more plentiful this year. This would produce the near-term effect of slightly smaller supplies headed to slaughter.

Live-cattle futures also are being supported from spillover buying in lean-hog futures, which are pricing in anticipation of stronger export demand for U.S. pork, analysts said.

Cash cattle bids are expected to become more widely developed near midday Wednesday after a few scattered quotes were seen in the south Tuesday at $1.25 a pound on a live basis. Light sales occurred at that level late Monday, when futures prices tumbled to new contract lows in the nearby months.

Cattle feeders in the south are asking from $1.27 to $1.28 a pound on a live basis and in the north at mainly 3 cents a pound over April futures.

Some analysts predict this week's sales in Texas and Kansas could be at mostly $1.26 a pound on a live basis. Prices in the south last week were at mostly $1.27 a pound live. In Nebraska, live sales were from $1.27 to $1.28 a pound, while dressed sales were mainly at $2.02 a pound.

The U.S. Department of Agriculture reported beef prices modestly higher Tuesday. Choice beef was up 56 cents a hundredweight at $190.45. Select rose 2 cents to $183.93. The load count for beef sales was 192.

The latest HedgersEdge packer margin index was at minus $45.35 a head, compared with minus $50.50 the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.